What is an encumbrance and name two examples.

What is an encumbrance and name two examples.

• A. An encumbrance is a tax lien only.
• B. A transfer of ownership with no restrictions.
• C. A deed restriction that is not an encumbrance.
• D. Two examples of encumbrances are Liens and Easements.

Answer: (D)

An encumbrance is a claim or restriction against a property that burdens the title or limits how the property can be used, but it doesn’t transfer ownership. Two common examples are liens and easements. A lien is a creditor’s claim against the property to secure payment of a debt; it stays with the property and must be resolved before a clear title can pass. An easement is a right that allows someone else to use part of the property for a specific purpose, such as utilities or a shared driveway; it restricts how the land can be used but does not convey ownership. The other statements don’t fit because a tax lien is just one type of encumbrance, while encumbrances cover a broader range of claims and restrictions. A transfer of ownership with no restrictions describes clear title, not an encumbrance. A deed restriction is typically an encumbrance, so saying it isn’t would be inaccurate.

An encumbrance is a claim or restriction against a property that burdens the title or limits how the property can be used, but it doesn’t transfer ownership.

Two common examples are liens and easements. A lien is a creditor’s claim against the property to secure payment of a debt; it stays with the property and must be resolved before a clear title can pass. An easement is a right that allows someone else to use part of the property for a specific purpose, such as utilities or a shared driveway; it restricts how the land can be used but does not convey ownership.

The other statements don’t fit because a tax lien is just one type of encumbrance, while encumbrances cover a broader range of claims and restrictions. A transfer of ownership with no restrictions describes clear title, not an encumbrance. A deed restriction is typically an encumbrance, so saying it isn’t would be inaccurate.